Best Practices for Smart Charitable Giving

Best Practices for Smart Charitable Giving

December 17, 2015

Happy holidays from all of us at HBA Wealth to you and your family! It’s the season of giving, so we'd like to share some tips for smart charitable giving this year. Recently, you have likely been bombarded with requests from charities in your email inbox and as your shop for gifts. But before you pull out your wallet, take few moments to better plan your donations.

We all enjoy giving, especially during the holiday season. However, you have likely heard of charities with sky-high administration costs that leave fewer resources to carry out their missions. What is the best way to be sure your donation actually helps the causes you care about? Follow our five tips for smart charitable giving this year.

Step 1 - To Give or Not to Give?

It's important to know why you want to give. Rather than giving as a knee-jerk reaction to a charity you’re not familiar with, planned charitable giving can have a greater impact on both your financial situation and your charity of choice. Deciding whether to give is a personal choice that you should take the time to consider. Think through your values, the causes that you find important, and whether you’d be better off giving your time or money.

There are many charitable causes that have a greater need for volunteers than donations, such as organizations supporting social interaction for children or the elderly. You may consider giving your professional skillset and working pro bono for a cause you’re passionate about. If you’re short on time, many charities today make it easier than ever to help those in need with donations.

Step 2 - How Much To Give?

Many young people, particularly those with student loans or other debt, believe that they should wait until they find financial success before they start giving. However, if you aren't willing to give a dime out of a dollar, you likely won't give $1 million out of $10 million.

Research shows that beginning to give when you’re starting out or before you feel financially ready can drive happiness and gratitude. In his book Why Good Things Happen to Good People, professor of preventative medicine Steven Post reports that giving to others has been shown to increase health benefits in people with chronic illness. In a 2006 study, the National Institutes of Health found that when people give to charities, the regions of their brain associated with pleasure, social connection, and trust are activated. Giving what you can this year is a great way to get started.

Step 3 - How to Choose a Charity.

Unfortunately, not all giving is created equal. The organizations that spend the most donated dollars on marketing are the first ones you're likely to recognize and who call or email consistently. To make sure the highest percentage of your donation goes to your intended recipient, it’s important to vet the charity you’re considering.

Look up the organization on or The Better Business Bureau’s to verify their legal status, check their records, and even review executive compensation. Many local charities have smaller administration and marketing costs, resulting in a higher percentage of your donation affecting your local community.

Step 4 - When Should You Give?

A well-thought-out plan can benefit both you and the charity of your choice. December may mark the giving season for more than one reason. While the holiday spirit motivates us to help others, so do looming tax bills. By making a charitable contribution before December 31st, you may be able to lower your total tax bill for 2015.

It can be especially advantageous to donate appreciated securities to avoid paying taxes on the gains. However, if you are subject to the Alternative Minimum Tax, these efforts may have the opposite effect. To see how a donation may affect your financial plan, work with a professional financial advisor.

Step 5 - Learn about Donor-Advised Funds.

Donor-Advised Funds (DAF) are charitable giving programs that allow you to combine the tax benefits of giving with the flexibility to support your favorite charities.

Contributions to your DAF can provide a current year's tax deduction, then be invested to grow tax-free. This may result in more dollars for the organizations you support when you decide to transfer the assets. The funds allow you to contribute appreciated securities and non-cash assets that can help to further lower your tax bill.

At Haydel Biel & Associates, we are specialists in helping our clients create and maintain Donor-Advised funds. We are happy to help answer any of  your questions and offer advice on the best way to give during this holiday season. Feel free to contact us today at (626) 529-8347 or email me at For more information on charitable giving best practices, read the Fidelity 2015 Charitable Giving Report.

About Ricky

Ricky Biel CRPC ® is a wealth manager with Haydel, Biel & Associates, an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with cutting edge financial technologies that make it easier than ever to accomplish your goals. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at